India, Japan platinum demand to be strong in 2017 - PGI

A saleswoman displays platinum rings for the camera at a jewellery showroom in New Delhi April 17, 2012.Parivartan Sharma/Files

SINGAPORE (Reuters) - Indian demand for platinum jewellery will grow by double digits next year, and Japanese consumption will stay strong, the head of Platinum Guild International said, with buyers drawn to prices that are off more than 20 percent from an August peak.

Platinum XPT= was trading above $940 an ounce on Tuesday, up from an eight-month low hit the previous day, and it still remains up about 6 percent for the year so far. The drop-off in prices over the two months since Aug. 12 has widened platinum's discount to gold to the most since June.

While gold is a low-margin business for Indian jewellers, retailers can scoop up returns of about 50 percent for platinum, said Huw Daniel, chief executive of Platinum Guild International (PGI), an industry group funded by South African platinum producers and refiners.

"In 2017, we're expecting significant double-digit growth in India and reasonable growth in Japan," Daniel told Reuters on the sidelines of an industry conference in Singapore.

Young Indians are now more keen on buying platinum either for themselves or as a gift, and that is "very different" to the traditional gold jewellery market in India, he said.

"Most gold jewellery in India is easily convertible into other forms if necessary, so people buy gold as a savings vehicle. That's not the case with platinum. It's being bought as personal jewellery," he said.

Platinum's steep discount to gold is also luring Japanese customers, he said. "With a price like this we can see platinum taking the share from white gold in jewellery," Daniel said.

The World Platinum Investment Council in September forecast a 520,000-ounce deficit in the platinum market this year, up from a 455,000-ounce shortfall predicted three months earlier, citing robust demand and weak supply.

In top platinum market China, however, demand remains weak amid an oversupply in jewellery and other luxury goods.